Why Is US Targeting Iran with Sanctions and Political Charades

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TEHRAN (FNA)- Iran has condemned a United Nations resolution that accuses the Islamic Republic of violating human rights, stressing that the measure's sponsors are playing a "political charade."

The resolution adopted by the UN General Assembly’s Human Rights Committee was approved Thursday in a 85-30, with 68 abstentions. 10 states were not present at the voting session. This means that while it doesn't have the approval of a majority of the member states (108), the resolution will probably be approved by the 193-member world body when it comes up for voting next month.

Speaking ahead of voting on the Canadian draft resolution, Iran's deputy ambassador to the UN Es’haq Al-e Habib said the countries sponsoring the measure have done everything in their power to “suppress or derail” Iranian people’s “century-long struggle for the causes of human rights and democracy.”

As is often the case, the United States and its handful of allies are behind this new move. They are also the ones helping the US to impose its unilateral sanctions against Iran on vague charges. 

However, these illegal sanctions and other political charades at the UN against Iran have produced a tangled web that often hurt bankrupt American and Western companies more than Iranian oil and gas exporters.

Given the intemperate and increasingly confrontational posture of the United States and its vassals, it is obvious that there is nothing to this than meets the eye:

1. Iran stands at the center of US ambitions in the Middle East and Eurasia. With its growing influence, Iran is the crucial link in the formation of a new Asian energy security grid by China and Russia. That explains why Washington and Arab vassals are desperate to keep Iran out of any transnational oil and gas pipeline deal, project or equation.

2. Iran has the largest combined oil and gas reserves in the world after Russia, and it refuses to be a US vassal. Its growing influence on the Western front is more to do with America’s support for corrupt and hated regimes and their ill-fated wars on Afghanistan, Syria and Yemen than it has to do with any active Iranian hostility, threat or intervention.

3. On the Eastern front, it is geopolitical circumstances that dictate Iran’s geo-strategic importance. The rapidly emerging economies of China and others and their growing energy needs in a world with finite and depleting energy reserves have been the forcing house for a new alliance of oil exporting and importing nations in Central and Eastern Asia.

4. China and other Asian giants need to secure supplies of oil and gas from Iran. The most significant development is the decision by the Trump administration to give sanctions wavers to China, India, South Korea, Japan, and some European countries to continue to purchase Iran’s oil which cannot be replaced by other producers.

5. As regional powers strengthen ties in this key energy market, they are also looking to China, and away from the West. Washington is desperate to stop this. The problem is Washington cannot replace Iran in the energy market in this part of the world so easily.

6. The South Pars gas field – the largest in the world – is shared by Iran and Qatar. They play a key role in global gas supply security as well, which means just like its oil exports, Iran’s natural gas supply cannot be replaced.

7. Washington is counting on its allies Saudi Arabia and Israel to sabotage Iran’s role as a reliable energy supplier and security provider. Its unilateral sanctions and political charades at the UN are specifically designed to isolate Iran, curb energ investment in the country and destroy its oil and gas infrastructures and stop it from being a reliable energy hub connected to the Caspian Sea, the Black Sea, the Persian Gulf and the Mediterranean Sea through pipelines and sea routes.

Considering the above, understanding the real reasons behind the sinister sanctions regime and baseless accusations against Iran regarding human rights can help us understand better why the American interventionists and cohorts continue increasing hostilities towards Tehran, why they refuse to end their illegal wars on Iran’s allies in Syria and Iraq, and why they push the region into chaos. Yet a look at their failures and defeats in the last 4 decades displays that they will eventually be forced to acknowledge defeat.

The Untouchable US-Saudi Relation Is a Core Element of US Imperialism

FEDERICO PIERACCINI

*(Defense Secretary James N. Mattis meets with Saudi Arabia’s First Deputy Prime Minister and Minister of Defense, Crown Prince Mohammed bin Salman bin Abdulaziz at the Pentagon in Washington D.C., Mar. 22, 2018. Image credit: James N. Mattis/ flickr)

In the last few weeks, numerous articles and analyses have been produced relating to the murder of Jamal Khashoggi in the Saudi consulate in Istanbul. However, the relationship between Saudi Arabia and the United States has not been questioned, and the reason for this has not yet been explained.

Nixon’s decision in 1971 to withdraw the United States from the gold standard greatly influenced the future direction of humanity. The US dollar rose in importance from the mid-1950s to become the world reserve currency as a result of the need for countries to use the dollar in trade. One of the most consumed commodities in the world is oil, and as is well known, the price is set by OPEC in US dollars, with this organization being strongly influenced by Saudi Arabia.

It is therefore towards Riyadh that we must look in order to understand the workings of the petrodollar. After the dollar was withdrawn from the gold standard, Washington made an arrangement with Riyadh to price oil solely in dollars. In return, the Saudis received protection and were granted a free hand in the region. This decision forced the rest of the world to hold a high amount of US dollars in their currency reserves, requiring the purchase of US treasuries. The relationship between the US dollar and oil breathed new life to this currency, placing it at the centre of the global financial and economic system. This privileged role enjoyed by the dollar allowed the United States to finance its economy through the simple process of printing its fiat currency, relying on its credibility and supported by the petrodollar that required other countries to store reserves of US treasuries in their basket of currencies.

This arrangement continued to sustain itself in spite of numerous wars (the Balkans, Iraq, Afghanistan), financial crises (the Black Monday of 1987, the Dotcom bubble of 2000, and Lehman Brothers’ subprime crisis of 2008), and the bankruptcies of sovereign states (Argentina in 1998). The explanation is to be found in the credibility of the US dollar and the US itself, with its ability to repay buyers of treasury bonds. In other words, as long as the US continues to maintain its dominance of the global financial and economic system, thanks to the dollar, its supremacy as a world superpower is hardly questioned. To maintain this influence on the currency markets and the special-drawing rights (SDR) basket, the pricing of oil in US dollars is crucial. This explains, at least partially, the impossibility of scaling down the relationship between Washington and Riyadh. Nobody should delude themselves into believing that this is the only reason why Saudi-US relations are important. Washington is swimming in the money showered by Saudi lobbies, and it is doubtful that those on the receiving end of such largesse will want to make the party stop.

The agreement made between Washington and Riyadh guaranteed that the latter would receive protection from the former and Washington would look the other way regarding Riyadh’s behavior within its kingdom and in the region – so long as Saudi Arabia sold its black gold in US dollars alone. This agreement was clearly a controversial one and has been kept away from the general public, even in the light of Khashoggi’s death and the liberal mainstream media’s piling on the Kingdom. Yet this is not the only reason why US-Saudi ties are so close. The initial agreements between the Saudis and the Americans concerned the petrodollar; but after the Islamic revolution in Iran in 1979 (Iran’s nationalist prime minister, Mohammad Mosaddegh, had been previously overthrown by the US and UK in 1953), Riyadh and Washington decided to declare war on their common enemy, with the hearty approval of Israel. The cooperation between Riyadh and Washington became even closer in the 1980s, through the common campaign against the USSR in Afghanistan through the use of jihadists recruited, trained and armed by the Pakistan, Saudi Arabia, and the US secret services. The use of jihadist terrorism as a geopolitical weapon has been a main feature of Riyadh’s statecraft.

The relationship between Saudi Arabia and the US evolved from a mere economic and protection agreement, to a full-fledged collaboration against the shared enemies of Washington, Tel Aviv and Riyadh, expanding on the existing cooperation since the 1980s of using jihadism to advance strategic objectives. The situation with Iran became of primary importance for US strategy in the region. Riyadh, with the passage of time, assumed a triple role, namely, that of being the guarantor of the petrodollar, a facilitator in the use of Islamic terrorism as a geopolitical weapon, and a regional opponent of Iran.

This relationship has been mutually beneficial. The House of Saud has been free to run its country according to the strict strictures of Wahhabism without Western interference; and Washington enjoys a capacity for unlimited military spending (especially after the 2008 crisis and the beginning of quantitative easing) simply through the printing of debt in the form of government bonds that are immediately acquired by other countries. Washington has effectively been printing waste paper and obtaining consumer goods in return, a state of affairs that has allowed the United States to squander six trillion dollars in wars in Iraq and Afghanistan without suffering significant economic consequences.

Ever since Donald Trump took over the White House, the process of de-dollarization that begun during the Obama era has only accelerated. With the unprecedented move in 2012 to remove Iran from the SWIFT international banking system, a dangerous precedent had been set that acted as a warning to the rest of the world. The United States revealed itself as willing to abuse its dominant position by wielding the dollar as a weapon against geopolitical adversaries.

The consequences of that action continue to be felt today. Many within the Western elite have come to recognize this mistake and are regretting it. Russia and China understood that they were next on the chopping block and set about creating alternative payment systems like CIPS that would serve to act as a backup system in case Washington tried to exclude Moscow and Beijing from the SWIFT system.

Trump contributed more than any of his predecessors towards further pushing the world in the direction of de-dollarization. Sanctions and tariffs have weakened confidence amongst US allies and forced the rest of the world to start looking for alternatives. The cases of Iran and Russia are instructive, with commercial exchanges being undertaken in currencies other than the dollar for a number of years now. There are dozens of other examples where the use of the dollar in commercial transactions has been abandoned. More complicated, however, is the financing of debt for private or public companies that often takes place in dollars. This exposes industries to a difficult situation in the event that their national currencies devalue against the dollar, making it more expensive to find the US dollars needed to repay creditors, leaving what are major national companies with the prospect of facing bankruptcy. As Russia learned in 2014 with the attack on its Ruble, exposure of potentially strategic sectors of the country to the economic influence of a foreign adversary should be avoided.

The push to renounce the use of the dollar in financial transactions also stems from the fear that the next financial crisis may affect global debt as expressed in dollars; not only destroying the US economy, but dragging down with it countries that are large holders of US treasuries. This is not speculation or conspiracy theory but simple deduction from observing the economic situation over the last 10 years. The global economy was saved in 2008 as a result of the confidence held by citizens following the intervention of central banks. The corrosive mechanism laid out by the Fed and its partners became evident months later. Central banks started printing unlimited amounts of money at 0% interest rates and furnishing it to banks and financial institutions to cover the debts left by the bursting of speculative bubbles like the one involving subprime mortgages.

The average citizen, seeing Bernanke and Draghi on TV talking about "unprecedented actions to save the system", felt reassured, and therefore felt their money remained safe, in banks or in US dollars. The next financial crisis – potentially the worst ever – is likely to be caused by either the raising of interest rates by the Fed and other central banks, or from the popping of one of the numerous debt bubbles around. The central point is that the citizens’ belief in the system will be put to the test because, as Draghi said, "[this weapon of QE] can be used only once". There is no protection for banks and speculative entities that could be in debt to the tune of many billions of dollars with no chance of survival.

With a view of to the possible collapse of the dollar-based financial system, several countries are selling their US government bonds, reducing their exposure and accumulating gold. This involves not just China and Russia, but even the European Union.

In such a situation, a crisis in relations with Saudi Arabia is unthinkable for Washington, especially when the region now seems to be guided by an axis that starts from Tehran and ends in Beirut, including Baghdad and Damascus. Riyadh is necessary for the Israeli strategy in the region, and Washington follows in tow for reasons related to the US dollar. Factoring the importance of Riyadh in supporting the petrodollar and in countering Iran in the region, it is not surprising why the Israeli lobby in Washington is doing its utmost to calm US senators down intent on punishing Riyadh for the Khashoggi affair.

If Saudi Arabia were really convinced of the innocence of MBS in the Khashoggi affair, it could use this situation to its advantage by reducing the role of Washington in its foreign policy. Turning to the east and increasing partnerships with China and Russia would have beneficial effects on the whole region, as well as reducing the importance of the United States in the world. Saudi Arabia is governed by a large family riven with divisions and feuds spanning decades. MBS has no interest in his kingdom and is occupied with his survival alone. He is aware that Netanyahu and Trump are his best bet for continuing to reign. Trump is equally aware of the importance of MBS in his communication strategy in the US, with a view to the midterm and the 2020 elections. MBS is for Trump the golden goose that finances the MAGA project, thanks apparently to Trump’s mesmerizing negotiation skills with the Saudis. Of course this is far from the truth, but what matters is the spin that Trump gives to this alliance.

Israel is the primary ally of MBS, given that the crown prince is the first Saudi monarch openly willing to establish diplomatic relations with the Jewish State and bring relations between the two countries out into the open. The upper level of the US government, the so-called deep state, tried for a few weeks to use MBS against Trump. But this strategy came to an end after the Israelis, together with some elements of the US deep state, saw the risk of downsizing the global relationship between Saudi Arabia and the US. MBS will hardly be pushed aside, and within the Kingdom his position seems firmer than many expected, as seen at the Davos in the Desert conference. Breaking up with MBS would have had unimaginable repercussions for the US’s hegemonic position, and this is something Washington can ill afford at the moment.

The use of jihadism and petrodollars as political and financial weapon against Washington's adversaries is reason enough to quickly forget Jamal Khashoggi and go back to ignoring the various abuses committed by Saudi Arabia. In this phase of the transition from a unipolar to a multipolar world, the US cannot afford to renounce some of the most potent weapons in its arsenal to wield against its geopolitical foes.

 US Saudi Relations

WRITER

FEDERICO PIERACCINI

Federico Pieraccini is an independent freelance writer specialized in international affairs, conflicts, politics and strategies.

Dollar, economic exchange or political coercion?

For several years, in many scientific circles working on economy and trade, there has been a talk of decreasing dollar’s credit and replacing it with other currencies. Many pundits believe that dollar has ceased to be reliable.

The risks of savings in dollar have been rising over the past years and have been more than doubled under the 45th guest of the White House, Donald Trump, and his economic and trade policies.

As you know, dollar ruled the global trade arena for decades. In view of this, before the emergence of the euro and empowerment of yuan and yen in the world markets, approximately all dealings and exchanges were made in dollar across the world. Strengthening of dollar in the global economy dates back to 1944, one year before the end of World War II. In 1944, more than 40 countries gathered in Bretton Woods, New Hampshire, the US, to decide on how to determine the world's post-war economic structure. One of the results of the meeting, known as the Bretton Woods Conference, was the adoption of dollar with the backing of gold as an international currency. That is, the United States government guaranteed a constant conversion rate of one ounce of gold for $35. The agreement was canceled by the US unilaterally in 1971 for a number of reasons, including the problems caused by the Vietnam War. Ever since, dollar has lost its backing as a global currency.

But why has dollar continued to maintain its value over the next decades, despite the unilateral breach of the agreement by the US? One of the factors was the pricing of oil exchanges with the dollar. Since 1970s, almost all oil exchanges have been done in US dollars even when the US lacked a significant role in exchanges among countries. Furthermore, the US dollar became a reliable source of investment for many capitalists in the world.

In macroeconomics money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account. Medium of exchange. Money's most important function is as a medium of exchange to facilitate transactions. Since 1944, when the US dollar was imposed over the world as a global currency, its role as the medium of exchange has been more conspicuous. In other words, earlier countries had difficulty in agreeing on the value of their goods for economic exchanges. The existence of dollar as a medium of exchange and a global currency solved this problem.

With the increase of dollar reserves of the countries, the function of dollar as a store of value was more spectacular. Thus, countries considered their dollar savings as an investment. In view of the current realities of the world economy, the question that arises is: Has dollar kept its role as a store for investment?

In response, it should be said that evidence suggests that investment in dollar has declined; some countries turn their dollar reserves into other forms of investment, which means a huge devaluation of dollar. In the first half of 2017, the Belgian central bank raised foreign investment of 200 million euros in Chinese yuan assets and 100 million euros in South Korean won. During this period, the European Central Bank allocated 500 million euros (equivalent to $ 558 million) of its currency reserves to invest in Yuan assets. This indicates the significant devaluation of dollar.

Hong Kong Economist Nathan Chu Hung in an analysis on the conversion of dollar to other currencies by countries of the Eurozone said: "Adding to yuan's assets by the European Central Bank will increase the interests and efforts of other countries to internationalize and make more use of the yuan. This will definitely affect internationalization and the global position of the yuan in the long run."

The global price of ounces of gold, has increased from $480 to $1350 since 1945. Thus, dollar lost 65% of its value against gold. One of the causes of dollar devaluation is the skyrocketing amount of US debt. According to the United States Department of Treasury, the US debt until the end of Barack Obama’s tenure was nearly $20 trillion. Many experts believe that an increase of $500 billion in these debts could be a threat to other economies in the world. It should be noted that, according to the International Monetary Fund, the US foreign debt was equal to 108% of its gross domestic product by the end of 2015.

In the past decades, in addition to economic power, dollar has been an effective tool in the US policy because of the high demand for it. Today it is used by the US as a ploy to wield the US hegemony against independent and defiant nations. MICHÈLE BRAND and RÉMY HERRERA, writers of “Dollar Imperialism” say: "What determines the value of dollar is not the amount of working dollars but demand for it. This demand is huge because of dollar's position as the international currency. This dollar position is maintained only by US military dominance, even though the US economy and its monetary policies are weaker. "

The authors of the article "Dollar Imperialism" believe that "not only dollar makes the US Empire possible, but the protection of dollar's position is one of the main reasons for the wars of the American empire. The financial and military power of the US depends on the fact that the dollar is the reserve currency as well as the currency for global trade. This creates a global demand for dollar. This global demand will allow the US to print as much dollar as it likes."

US domination and misuse of dollar-based global trade to enforce sanctions and pressure on other countries have led many governments to mull the policy of eliminating dollar from their oil and trade exchanges and try to withdraw from dollar by using bilateral and multilateral monetary treaties. The group of five new emerging economies, the BRICS (Brazil, Russia, India, China and South Africa), has been actively accelerating the process of increasing bilateral trade exchanges in their own national currencies since July 2014. Based on the agreements reached and the proposed solutions, the volume of trade exchanges among these countries is estimated to amount nearly 17% of all global trade exchanges each year. If this is achieved, dollar will be eliminated from 17% of the total global trade. This translates into independence of the countries from dollar in economic activities.

Removing dollar from international exchanges will not only nullify American hegemony on these exchanges, but will also eliminate the costs of converting currencies into dollars and vice versa. Meanwhile, the use of national currencies of countries will increase their value and credibility in international markets as well as bilateral and multilateral exchanges of countries in the form of exchange treaties.

The possibility of dollar printing, playing with interest rates, and adopting monetary expansion policies by the US regime allows the country to play a role in the dollar-dependent economies of the world. To get rid of this plight, some countries are trying to get rid of dollar in their trade exchanges. Investing in the local currency and concluding contracts and financial reports based on non-dollar currencies can reduce dollar's clutch over global trade. Considering the need for evaluation criterion in global economic exchanges, it seems that the existence of a new global reserve is necessary. A strong monetary currency, which is not the national currency of any country, can replace dollar in the global trade. This money needs to be managed by international institutions which are reliable and neutral in comparison with current institutions.